Point + Click :: EA, Take 2

The deadline for the EA buyout of Take 2 has passed, but Paul Toms feels like the real action is still coming down the pipeline.

When I wrote about the potential EA buyout of Take 2 Interactive a while ago, there was little doubt in my mind that the deal was just about to happen. In a gaming landscape recently dominated by corporate buyouts and mergers, it seemed almost inevitable. The always-dominant EA had an opportunity to acquire one of the largest players in video gaming, simultaneously removing their major competition in the entire sports genre. The battered Take 2 had an opportunity to cash out after years of criticism, bad luck, and financial uncertainty. From a business standpoint, it seemed like the perfect match.

But last Friday's buyout deadline came and went without so much as a whisper from either side, and now I'm beginning to wonder if I sold Take 2 a little short.

Before the launch of Grand Theft Auto IV earlier this month, EA CEO John Riccitiello told Kotaku that the value of the GTA franchise, and specifically GTA IV, was "already baked into their estimates." But I'm not sure if anyone expected the newest installment in the series to launch to the tune of half a billion dollars in revenue in the first week. To put that into perspective, that's over two-and-a-half times larger than the largest Hollywood opening week ever (Pirates of the Caribbean: Dead Man's Chest), according to Box Office Mojo.

So where do we stand? Well, I'm not quite sure. In a recent interview, Riccitiello said the chances were "50-50." Take 2 executives, of course, would have you believe that there's no chance at all.

But let's look at some numbers. As of market close on Friday, Take 2's stock was priced at $27.10 a share. EA's current bid for all shares is $25.74, so clearly there's some ground to be made up. If EA wanted to just match those share prices, we'd be looking at upping the offer by another 5%, and that's still not a guarantee that the deal will get done. And, if the EA analysts did actually include GTA IV's mammoth opening week in their offer, we may not see EA make even that jump.

But if I were a betting man, I'd give this a 60/40 chance of getting done. Whether it's due to a need to retake market share from the new industry power at Activision Blizzard, or a move to eliminate 90% of their competition in the sports gaming genre by devouring 2K Sports as a whole, this buyout makes too much sense in the long run for EA to pass up.

So keep an eye on this one, gamers. It should be an interesting few weeks and one that could reshape the gaming landscape for years to come. And if you've got even a passing interest in video games, you should definitely be pulling for the underdog in this one. The last thing we need is another corporate super power controlling the quality of our hobby.

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